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Are you well prepared to face bear market?

In my last post, I’ve discussed how you can get benefit from a bear market (to read that post, Click here).
Today, I’ve come with a very interesting quiz session. From this question-answer session, you’ll find that whether you are financially and psychologically prepared for a downturn in equity market or not.

Instruction:

Choose the answer of the questions. The point of each answer will be the as follows:-A: 1 Point, B: 2 Points, C: 3 Points, D: 4 points
Sum up all the points and then see the score card to know your current condition.

Quiz2: How much of your Equity Investment is in Mid and Small Cap stocks?

A. I don’t invest in such a way. No idea.
B. More than 50%
C. 25-50%
D. Less than 25%

Quiz3: What did you do with your equity investment when market crashed in 2008?

A. Withdrew all my holdings from the market with a big loss
B. I had stopped investing totally and sell off my position when market slightly recovered
C. Rebalanced my overall portfolio and bought more stocks
D. I never stopped investing, Continued investing to take advantage from lower prices

Quiz4: What will be your action plan if equity market or Mutual funds fall by over 30%?

A. I’ll exit with losses and will like to invest my hard earned money in a safer option
B. I’ll wait till the price recovers at least to my buying price and then I’ll exit
C. I’ll rebalance the overall portfolio
D. I’ll buy more equity stocks or MF units to take advantage of lower prices.

Quiz5: If you have invested some money in equities then within how much time do you need that money?

A. Within 8-12 months
B. 2-3 years
C. 5-8 years
D. More than 8 years

How to Predict and Prepare for a Stock Market Crash

Quiz6: From where have you got the money for investing in equity market?

A. I’ve borrowed the money from my friends, relatives or bank
B. Have withdrawn from other investment
C. Have raised this money by selling other aseets, like- gold
D. Surplus money meant for investment

12-19 points:

20-27 points:

You are fairly well prepared to face the challenge of bear market but need to increase your risk tolerance level. Take long term perspective when investing in equity market. Keep enough emergency funds in hand.

28-32 points:

Very Good! You are well prepared to take advantage of a bearish equity market. Your financial situation is comfortable and you are ready for a long term investment in equity market.

Option Trading – How To Earn If You Can’t Predict The Market

Conclusion:

Bull and bear condition in the equity market is the two sides of a coin. If you love the bull market then also should be ready to face the challenges in the bear market. Normally a bear market condition may extend from 1 year to 3 years. To keep you safe in the bear market situation, maintain the below mentioned rules and never find yourself trapped into any financial problems.

Rule1.

Invest only the surplus money in equity. Make sure that you do not going to use this money not before than 6 years.

Rule2.

Never ever borrow fund for investment purpose.

Rule 3:

Maintain well balance in different stream of investment. Rebalance the portfolio at least once in a year.

Rule4:

Don’t go for Future & option unless you have good knowledge in these instruments.

Rule5:

Follow the above rules in your investment and have a well secure future.

About Moonmoon Biswas

Moonmoon Biswas is an Equity research analyst . She has more than 10 years of experience in this field. She has proven track record in the field of Technical analysis and the Fundamental analysis.
From the educational background, She is an MBA-Finance with CFA (India). She has work experience in the leading broking houses in India and has also in hand experience in Australian Security Market.
She has her own equity research firm and currently also engaged in digital marketing.